In this blog we put down our thoughts on the 5 big threats to the future of Australian compliance.
- Software houses and Artificial Intelligence
Starting the countdown from the most important threat (I guess that means we have the drumroll first), is Software houses and Artificial Intelligence.
We put these at the top of our list, and research shows that the longer term effects on the time it takes for Australian compliance work is going to come from the Software providers. Already the accountant’s dominating role as the intermediary link between the software house and the accountants client has diminished with the arrival of the cloud. Clients now have the opportunity to move pretty quickly from one accountant to the other, though the Software houses are aware of these issues.
But the big impact is going to come from Artificial Intelligence ploughing through transactions that accountants would normally re-key. We’ve already seen these AI systems launched with much fanfare in Australia, and it can only be 1-2 years until this impact is felt. Potential impact on reduction of compliance workload = 80%
We’ve included this in our top 5 due to the massive increase in outsourcing over the past 3-5 years. Whilst Odyssey has been outsourcing for over a decade, it’s only in the last 3 years that there has been a massive takeup of outsourcing by Australian accounting firms, and let’s include financial planners, bookkeepers and anyone else associated with the preparation of compliance work.
Outsourcing actually lowers the cost to complete compliance work, but it does remove this work from the day to day work done by Australian accountants. Flow on impacts include plenty of discussion in the marketplace about what accounting graduates will do now that the compliance work is done more cheaply overseas. We’ve recently seen the online article mentioning BAS agents licences and work going overseas.
- Pricing pressures
Rounding out our top 3 are Pricing pressures. More recently we’ve seen some of our clients asking for detailed breakdown on work done for some jobs, just to see whether there is any surplus items or tasks being down that isn’t (really) required to complete the compliance work. This is interesting because at Odyssey’s $15 for bookkeeping and $30 per hour for tax work, we haven’t traditionally seen clients discussing price pressures. However, they are now.
Part of this must be due to the information age and ability for clients to move seamlessly to another accountant, and the likelihood that geographic limitations are reducing constantly. At the same time you can only wonder how compliance work can competitively be done by Australian labourers with our high labour cost and plenty of add-ons. Add the odd massive litigation and generational mobility that seems to frequently hit the news and hiring/training Australian graduates seems fraught with downsides.
- ATO, Business coaches, Financial planners and Software System sellers
Heading into the number 4 spot are the ATO, Business coaches, Financial planners, Software System sellers. These are all ancillary to the Compliance work but still impact on compliance.
The ATO wants compliance done, and might not necessarily wait for Australian tax agents to prepare work. Given enough confidence that bookkeeping/accounting software could automatically prepare a half decent tax return and I’d expect the automation of compliance might become a reality.
Business coaches who are pushing their accounting clients out of their comfort zone of compliance.
Financial planners and bookkeepers are vying for the same work as accountants, and it’s an ever increasingly competitive market.
Software System sellers are the last ones to keep an eye on. They are the ones selling you systems to manage your compliance work, while at the same time telling you “compliance isn’t dead”, but in fact increasing budget changes will mean lots of more compliance work so you should buy our systems to manage this workload. I’m personally not buying into that!
- The Black Swan event
We round out our top 5 threats with the Black Swan event. We include in this section anything that might change the whole horizon of the Australian compliance work. This might be simply a new site that offers compliance work at massively reduced prices, or some other digital offering that has the same impact as AirBNB or Uber. Whether it happens or not is open to conjecture, but it will have massive ramifications if it does.
Ok, so that rounds out our thoughts on the 5 big threats to the future of Australian compliance.